Nearmap (ASX: NEA) share price down 15% following FY19 results

Promising growth opportunities have been overshadowed by investor disappointment as Nearmap’s share price falls following the release of underwhelming FY19 results.

Nearmap Ltd, the A$1.48 billion aerial imagery and location data company has handed investors market-beating returns in recent times, with its share price up 115% year-to-date.

Even still, since delivering its FY19 preliminary results last Friday, Nearmap’s share price has fallen as much as 15% as investors grow impatient with the company.

Here’s everything you need to know about Nearmap’s preliminary results:

Record growth and cashflow in focus

Though the market responded negatively to Nearmap’s results, the earnings release contained a number of highlights.

One of the company’s key financial metrics, Annualised Contract Value (ACV) achieved ‘record growth’ during FY19.

The company saw its ACV value in the North American market rise 78%. Growth in its Australian business was more modest, increasing just 19% year-over-year.

Overall, this amounted to an overall ACV increase of 36%, bringing the group total to A$90.2 million.

Besides annualised contract value growth, Nearmap Ltd achieved its previous guidance of being cashflow breakeven during FY19. Not only that, but the company currently touts a healthy balance sheet, with a cash balance of A$75.9 million.

New opportunities emerge

Utilising A$9.0 million from last September’s capital raise, the company continues to expand into a number of new areas.

The company has so far seen positive results from its June 2019 launch of 3D Online, an Artificial Intelligence product. The company is also planning the ‘first commercial sale of Artificial Intelligence content’.

Speaking of these new developments, Nearmap’s CEO and Managing Director, Dr Rob Newman said that:

‘Our commitment to innovation and our investment in new product and content such as 3D and Artificial Intelligence mean that we are well placed to continue to deliver sustained growth and expansion in our core markets into FY20 and beyond.’

More changes coming

Finally, the company pointed out that it would make a number of changes to its accounting policies and estimates going forward. Though such changes are important, they were likely not the primary cause of Nearmap’s recent share price fall.

Speaking of changes to amortisation practices, for example, the company pointed out that this new ‘policy does not affect the Company’s growth strategy or outlook’.

Final thoughts on Nearmap’s stock

Conclusively, given the company’s elevated valuation prior the release of its preliminary results, even with a current market capitalisation of A$1.48 billion – on an ACV of just A$90.2 million – the selloff we have witnessed during Friday and Monday's trading sessions is hardly surprising.

In saying that, the achievement of cash flow breakeven in the 2019 fiscal year, in addition to a number of promising new growth initiatives on the horizon, means the company remains one to watch.

The Nearmap Ltd share price rebounded slighlty this morning, up a little more than 1%.


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